20010319.min.doc

MINUTES OF DECISION MEETING
MARCH 19, 2001 - 1:30 PM

In attendance were Commissioners Dennis Hansen, Marsha Smith, and Paul Kjellander.

Commissioner Hansen called the meeting to order. The first order of business was approval of the minutes of the February 5, 2001 Decision Meeting. Commissioner Hansen moved for approval. A vote was taken on the motion and it carried unanimously.

The second order of business was the CONSENT AGENDA. There were no questions or discussion on any of the items and Commissioner Smith moved for approval of the Consent Agenda. A vote was taken on the motion and it carried unanimously.

The next order of business was MATTERS IN PROGRESS. Commissioner Hansen noted that the Commission was going to privately deliberate on items 10 and 11, so item 12 would be considered first:

Weldon Stutzman's March 13, 2001 Decision Memorandum re: Approval of Installation of Fiber Optic Route Between Riggins and Grangeville, Idaho. Case No. GNR-T-00-40.

Mr. Stutzman reviewed his Decision Memorandum. Commissioner Kjellander made a motion that the Commission approve and issue an order for the construction of the fiber optic route with the requirement that Citizens report the anticipated and actual construction costs and that the access to the route by competing telecommunications companies be competitively neutral.

Commission Hansen commented that he supported the motion and thought the fiber route will improve the communications between northern and southern Idaho and provide customers with access to high speed, broadband service. He stated the project is in the public's interest.

Commissioner Smith said she will support the motion but wanted to discuss whether there should be another filing before approving expenditure of dollars. She said she would like to see some details and numbers and would like Staff to look at the numbers in Verizon's proposal regarding the stretch between Lewiston and Genessee to see what including it would entail and how much it would cost. She stated she is in favor of the project and in response to some of the comments Qwest made, she didn't believe it is contrary to the Governor's budget address and it is compatible with the goals of providing this kind of service within our state. She noted divestiture happened 17 years ago and the people in these communities have been waiting a long time, so she didn't think we ought to depend on the private sector and this kind of service wasn't coming anytime soon to this part of the state. Commissioner Smith added that she didn't view the project as "free money," knowing very well where it came from. She said it is appropriate to use it to benefit the people in the area where the money came from. She said although she is in favor of the project, she is uncomfortable giving them carte blanche without seeing a detailed construction plan with numbers that can be examined by people who know what is reasonable. She stated she also wanted to be able to see their proposal for granting access to other carriers and interested people who wish to use it as well as investigating the possibility of including the Lewiston to Genessee stretch.

Commissioner Hansen asked Commissioner Kjellander if he wanted to change his motion to reflect Commissioner's Smiths comments. Commissioner Kjellander noted that in his motion he had asked Citizens to report the anticipated and actual construction costs, so if that could also include Commissioners Smith's concerns, all points would be covered. A vote was taken on the motion and it carried unanimously.

Carolee Hall's March 13, 2001 Decision Memorandum re: Petition fromVerizon Customers Requesting a Local Calling Plan from Wallace/Osburn/Mullan to Coeur d'Alene/Harrison Areas.

Mr. Cusick reviewed Ms. Hall's Decision Memorandum. He stated Staff and Verizon have been working informally on the petition for a couple of months. He noted the Company proposed adding Coeur d'Alene and Harrison to the customers' current Community Plus Plan and that would increase the rates on that plan by $3.40 for residential, up to $20.05, and would increase the business rate by $11.30 up to a rate of $40.65 rate. He said Staff proposed adding a Premium Plan instead that includes Coeur d'Alene and Harrison, thus avoiding a mandatory rate increase for those customers on the Community Plus Plan. He stated Staff also suggested that the rates charged be the same as the Premium Plan for areas like Clarkfork, Hope, Priest River, and Spirit Lake, which are $25.02 for residential and $58.22 for business. Mr. Cusick stated the company is concerned that the take-up rate on the Premium Plan for these communities would be too small and that it would be unable to recover its costs. He stated Staff is concerned that raising the rate on the Community Plus Plan, however, may also force some people off that plan, actually decreasing their calling area in effect. He said Staff therefore recommended the Commission open a docket to allow for discovery and cost analysis to determine what the actual costs are and what the take-up rates might be for the Premium Calling Plan for the Wallace, Osburn, and Mullan residents to call into Coeur d'Alene and Harrison, thereby avoiding the mandatory rate increase to the current Community Plus Calling Plan.

Commissioner Smith said she recalled there was a lot of discussion about this area when the PUC did the first calling plan for this area. She said it reminds her of the Stanley area—if you're on one side of the road you want EAS and if you're on the other side of the road, you really don't care. She said she thought it would be prudent to open a case and have the Staff investigate it further, and that it might be wise if Staff went up there and conducted a workshop to determine the public sentiment about having a $3.45 rate increase for everyone and whether that is preferable to having premium calling. She noted that she suspected the preferences would depend upon where customers live. She stated she would like to make her foregoing comments a motion. There was no discussion on the motion. A vote was taken and the motion passed unanimously.

Doug Cooley's March 14, 2001 Decision Memorandum re: Telecommunication Relay Services 2000 Annual Report.

Mr. Cooley reviewed his Decision Memorandum. Commissioner Smith made a motion to leave the TRS rates as they are. A vote was taken on the motion and it passed unanimously. Commissioner Hansen made a motion that the Commission conduct an executive session following the meeting to discuss the TRS administrator's contract. A vote was taken on the motion and it carried unanimously.

March 16, 2001. In the Matter of the Application of Idaho Power Company and Astaris LLC for Approval of a Letter Agreement Amending the Electric Service Agreement Between the Parties. Case No. IPC-E-01-09. Don Howell and John Hammond. (No memo.)

Mr. Howell stated that on Friday, March 16, 2001, Idaho Power submitted for Commission review a letter agreement that the Company had reached with its largest customer, Astaris (formerly FMC Corporation). He stated that the Company proposed in the letter agreement to enter into a conservation program where the Company would buy approximately 50 megawatts of power, seven days a week, 24 hours per day, in a schedule as set out in an attachment to the letter agreement. He noted that Astaris has been considering shifting its manufacturing process from a dry, elemental phosphate process to a purified, or wet, phosphoric acid process. He said the conversion of moving from one process to the other would significantly reduce Astaris's demand for electric energy. Mr. Howell stated that given the current market conditions, the parties entered into discussions that culminated in the letter agreement before the Commission. He stated that because of the market forces at issue, the Company is requesting the matter be considered under expedited modified procedure in a seven-day time frame. He added that the Company is seeking a derivative to more or less act as an insurance policy and it had requested an opportunity to recover the cost of the derivative through the Company's PCA mechanism. He noted that power is sold to Astaris in two blocks—the first block being the take or pay—and that Astaris would continue to pay for the demand charge for the first block, which is roughly $440,000 per month. He stated that as of March 31, 2003, the existing agreement would be terminated and the parties prior to that time would pursue a new agreement that would take place from April 1, 2003 forward. He said at this point in time Staff had not delved too deeply into the Application but the facts of the case warranted expedited treatment, and Staff recommended seven days notice with the Notice of Application to be faxed to the parties. He also recommended that the next Decision Meeting be rescheduled to March 28th in order to allow time for comments. Given the expedited nature, he stated Staff hoped the Company would be forthright in providing any answers to discovery questions without having to resort to formal discovery.

Commissioner Hansen stated he was concerned about the time crunch for comments and asked if comments would need to be back to the Commission in seven days or postmarked by the deadline. Mr. Howell replied it is the Company's request that comments be handled on a seven-day cycle, making comments due next Monday or Tuesday with the Decision Meeting to follow on Wednesday, March 28th. Commissioner Hansen asked if comments would be due prior to the Decision Meeting. Mr. Howell clarified that comments should be due no later than the close of business on March 26th, giving the Commission all of the following day to review them and for the Staff to perform any analysis.

Commissioner Smith commented that it seemed to her the Company was asking that right now items 1, 2, 3, 5, and 6 of the letter agreement be approved and as to items 4 and 7, we approve today the payment to Astaris for buying back the energy. She said it seemed to her the only item the Company wants the PUC to seek comment on is whether it should be run through the PCA. She stated that the request fits with the Company's other efforts it has been taking to reduce demand and cover energy needs, so she approved of the paragraphs requested, and as to requesting comments, she felt it would be of benefit to the remainder of Idaho Power's customers to flow this through the PCA. She stated that when asking for comments, we could indicate that it is the Commission's preliminary finding that it would be of benefit to pass this through the PCA and ask commenters to agree or disagree in order to better focus their comments. She noted that if Idaho Power does have to purchase a derivative to cover its proposed payments for the time they are out on comment it would be appropriate for Astaris to share the costs of that derivative if one is purchased. She recommended comments be filed by noon on the 27th to give parties another half day since the time period for commenting is so short.

Commissioner Hansen stated that would be fine with him. He said there have been instances where comments have come in right before the Commission is scheduled to make a decision, and he would like them earlier so there is time to review them.

Commissioner Kjellander said that as outlined by Commissioner Smith, if we look at narrowly focusing what we want comments on, we should be able to get the comments in plenty of time, but it puts the responsibility on the Commission to be very succinct and clear in its Order and press releases with regard to what we are requesting comments on and so we don't end up having comments all over the board, which would waste time and effort with such a short window in which to consider the matter.

Commissioner Hansen stated he understood that Astaris is shutting down two furnaces—#1 and #4—and he asked if that meant there will still be two furnaces taking power. He said he had understood that during the last several months or year, only two furnaces were running anyway. Mr. Howell replied that furnaces #1 and #4 use a total of 120,000 kW, and the other two furnaces both operate at 85,000 kW, so Astaris would continue to exercise its right to demand but as far as which furnaces and how many, he didn't know, so he referred the question to Ric Gale of Idaho Power.

Mr. Gale replied that two furnances will be rendered inoperable for contractual purposes, and for contract demand, only one furnace will operate at a time and the other one will be on standby.

There was no further discussion, and Commissioner Smith made a motion to approve the Application filed by Idaho Power Company and request comments be filed by noon on March 27th regarding the Commission's preliminary determination that it would be beneficial to run the change in the Company's contract through the PCA. A vote was taken on the motion and it passed unanimously.

The meeting was then adjourned and the Commission went into executive session.

Dated this ____ day of April, 2001.

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COMMISSION SECRETARY
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